Read the highlights of this week’s commentary from Helios:
- The Federal Reserve held rates steady at their May meeting, citing heightened risks of stagflation due to trade policy uncertainties. Chair Powell described the economy as “solid,” downplaying the first quarter’s 0.3% GDP contraction. Powell emphasized a cautious approach, stating that there is no urgency to cut rates and opting to wait for clearer economic data before making policy adjustments.
- President Trump announced a trade deal with the UK, reducing US tariffs on up to 100,000 British cars annually from 27.5% to 10%, and eliminating duties on UK steel and aluminum. In return, the UK will lower barriers for US beef and ethanol. Trump also proposed cutting Chinese import tariffs from 145% to 80% ahead of weekend negotiations as he looks to de-escalate the trade war.
- In March 2025, the US trade deficit surged to a record $140.5 billion, driven by a rush to import goods ahead of tariffs announced on April 2. President Trump stated that a 10% baseline tariff will remain in place even after future trade deals, with possible exemptions. Bloomberg Economics expects a sharp drop in import volume, which won’t be reflected in the trade data until the May report is released on July 3.
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